An ominous economic trend may be returning to Latin America, and it could have deadly consequences

Patricia
Araujo with children in front of their stilt house, a lake
dwelling also known as palafitte or "Palafito," in Recife,
Brazil.Thomson
Reuters

Latin America and the Caribbean make up the only region that
managed to reduce inequality during the first decade of this
century, according to the UN Development Program.

Since 2000, the population in poverty has fallen from nearly 42% of the region's
almost 600 million residents to just over 25% — "in
absolute terms, this translates to at least 56 million
people lifted above the poverty line," according to Americas Quarterly.

Moreover, 82 million people in the region were hauled
into the middle class from 2000 to 2012, and the region's Gini
coefficient, a measure of inequality, improved, falling to 51.8 in 2012 from 55.6
in 2003.

But many of those workers whose economic status has improved are
now imperiled by the economic headwinds that have struck the
region.

A December 2014 paper from the World Bank found "stagnation
in the pace of reduction of income inequality in Latin America
since 2010."

The paper singled out Mexico and parts of Central America for
increases in inequality, noting that Colombia, Ecuador, and
Bolivia had seen a slowing rate of inequality reduction.

And slowing or reversed poverty reduction could bring even more
inequality to a region that already has 10 of the 15 most unequal countries in the
world.

A
resident of the Metro Mangueira slum was comforted by neighbors
during an eviction in Rio de Janeiro on May
29.REUTERS/Pilar
Olivares

And as research has shown, a higher level of
economic inequality is linked to a higher level of violence.

A paper published in 2014 examining the Mexican
drug war found that from 2006 to 2010, "an increment of one
point in the Gini coefficient translates into an increase of more
than 10 drug-related homicides per 100,000 inhabitants."

This relationship wasn't found to exist before 2005, only
after Mexico's war on drugs started in 2006. This
is "likely because the cost of crime decreased with the
proliferation of gangs ... which, combined with rising
inequality, increased the expected net benefit from
criminal acts after 2005," according to the paper's authors, emphasis
added.

Genaro
Perfecto, 38, and his wife, Cecilia Feliciano, 37, inside their
house in San Quintin in Baja California, Mexico, on April
18.REUTERS/Edgard
Garrido

If this finding holds for the region at large, it may augur an
increase in violence in what is already one of the world's most
deadly regions: In 2012, 13 of the world's 20 highest homicide rates
belonged to countries in the region, according to the UN.

As of 2015, Latin America and the Caribbean was home to 41 of the
50 most violent cities in the world. The
region accounts for one-third of global homicides, despite being
home to just 8% of the world's population.

More inequality, more violence

Inequality, with its link to violence, remains a persistent
problem for Mexico in particular.

More worryingly, in a "more unequal setting, the higher the rates
of violence," America's Quarterlynotes.

A
girl seen outside her home on the outskirts of Oaxaca in 2011.
When President Felipe Calderon came to power in 2006, he pledged
to cut rampant poverty in Mexico. Instead, millions more joined
the ranks of the poor.REUTERS/Jorge
Luis Plata

Both
total homicides and intentional homicides have risen consistently
in Zacatecas, Mexico, in recent years.Christopher Woody/Infogram/Mexican government
data

Over that same period, the number of intentional homicides (i.e.,
deliberate killings) in the state rose consistently, from 74 in
2008 to nearly 300 in 2015, according to government data.

And there are signs that a rise in violent deaths has a cooling
effect on economic opportunity.

For every increase of10percentage points in homicide rates in Mexico, "you
see an increase in unemployment in that region of half a point,"
said Viridiana Rios, a Harvard Ph.D. and research fellow
at the Wilson Center in Washington, D.C.

"Unemployment currently in Mexico is 5%, so for each 10 points of
increase in the homicides rates, you see half a point extra on
unemployment. That's pretty significant," Rios added at a
conference on Mexican security at the Wilson Center in late
January.

'Virtuous and vicious circles'

Violence and economic troubles are not uniform in Mexico.

Aguascalientes state, just south of Zacatecas, had about one-fifth the number of intentional homicides
as Zacatecas in 2015, while Mexico state, further
south, had almost 10 times the number of intentional homicides
last year.

Moreover, some Mexican states have done quite well economically recently, like
Aguascalientes, whose gross domestic product grew 14.2% in 2014,
while Mexico state's grew just 1% over the same period.

And in Mexico, as in much of the region, divergent trends in
growth "threaten to aggravate already deep economic divides,
creating virtuous and vicious circles in terms of infrastructure,
education, and opportunities,"
wrote Shannon O'Neil, the senior fellow for Latin American
studies at the Council on Foreign Relations' Civil Society, in
June.